Elgan: Even AT&T says AT&T can't handle the iPhone

It's unanimous then. Everybody agrees iPhone shouldn't be exclusive to AT&T

Editor's note: This column replaces another Mike Elgan column that was inadvertently posted Sept. 4.

Most iPhone users oppose Apple's exclusivity arrangement with AT&T, and have since the beginning.

Competitive carriers, such as Verizon Wireless, Sprint and T-Mobile, didn't like being shut out of the iPhone phenomenon.

The FCC isn't thrilled, either. The agency is looking into Apple's exclusive relationship with the carrier.

And Apple has got to be unhappy. AT&T failed to support multimedia messaging (MMS) and tethering (using a phone as a laptop modem) now that iPhone itself supports those features. (AT&T finally said last week it would add MMS starting Sept. 25, although there's still no date for tethering.) Apple's best customers complain about AT&T's lousy service and misinformed salespeople. Apple worked hard to perfect the iPhone experience, and AT&T is wrecking it.

This week, even AT&T itself started complaining about the burdens of serving as the only U.S. carrier for iPhone.

It's unanimous. Everybody hates Apple's exclusivity arrangement with AT&T. Even AT&T.

AT&T blames users for its lousy service

While iPhone users complain about AT&T's "dropped calls, spotty service, delayed text and voice messages and glacial download speeds," according to a piece published last week in the New York Times, AT&T blames iPhone users. "Overnight we're seeing a radical shift in how people are using their phones," AT&T CTO John Donovan told the Times. "There's just no parallel for the demand." Donovan told Fortune magazine that "3G networks were not designed effectively for this kind of usage."

And, as a BusinessWeek article makes clear, there's no way AT&T will be able to meet the traffic demands of iPhone users any time in the next few years. (The article also confirms that AT&T has deliberately delayed MMS and tethering because it simply can't handle the traffic.)

An article in the Wall Street Journal last week even has AT&T complaining about the $400 subsidy it has to pay for each iPhone sold.

Blaming users might convince some critics, but my questions to AT&T are: So why did you take the job? And why do you take my money? After all, it's not as if iPhone fans were clamoring for Apple to sign with you exclusively. You "won the contract" against the wishes of the iPhone user community. Now deliver!

And although AT&T is fishing for sympathy now, the story just one fiscal quarter ago was that AT&T's profits were "boosted by iPhone," and that the iPhone was helping the carrier weather the recession better than most. "The base of iPhone customers is now large enough to offset the subsidies for new iPhone users," Bernstein analyst Craig Moffett said back in April. What happened in the past three months to change all that?

Besides, AT&T acts like a company with money to burn. AT&T reportedly spent $8.2 million in the first half of this year lobbying Congress. The company is expected to spend more on lobbying this year than it did last year -- money that could be spent improving network performance.

In fact, AT&T is the No. 1 political contributor in the nation, spending an incredible $43.5 million since 1989 to buy influence in government. AT&T complains that it doesn't have the money to service its iPhone monopoly, while at the same time spending more than every other company on currying favor in Washington. That doesn't make sense.

The solution isn't government regulation, but for Apple to save its most valuable product by offering it on as many carriers as possible. That would spread the "burden" of iPhone traffic across multiple carriers; enable users to switch carriers that provide bad coverage, service, networking performance or pricing; and let iPhone users enjoy "family-plan" pricing that includes their non-iPhone family members. Competition works.

One analyst predicts that the iPhone will be offered on other carriers next year. But that's just some dude talkin'. I would like to see Apple announce the expansion of support beyond AT&T as soon as possible. Wednesday would be nice.

I don't think an exclusive Apple relationship with AT&T serves iPhone users. I'll bet you don't either. The FCC sure doesn't. The other carriers don't. Even Apple probably doesn't think so.

And now, the piece de resistance: Even AT&T admits that it can't handle the iPhone all by itself.

Apple: Tear up that contract!

Mike Elgan writes about technology and global tech culture. Contact Mike at mike.elgan@elgan.com, follow him on Twitter or his blog, The Raw Feed.

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